Groups got $11.6M from board they serve on

The $2 million awarded by First 5 San Diego last month to organizations whose leaders sit on the commission awarding the funds was part of a pattern of such grants.

The commission dispenses tobacco tax dollars designated for early childhood education under Proposition 10, approved by voters in 1998.

Board members allocating the funds in San Diego include Nick Macchione of the county’s Health and Human Services Agency and CEO Sandra McBrayer of the Children’s Initiative nonprofit group.

Both organizations were awarded grants in April, sitting out when the commission approved the funds for their own employer.

After the funds were awarded, U-T Watchdog asked the commission for its history of funding to both. A review of documents obtained under the California Public Records Act shows the two organizations have been awarded $11.6 million in commission funding since July 1, 2013.

Commission officials say there is no conflict of interest because the commissioners did not participate in the discussions and left the room when the votes to award the funds were cast.

State conflict of interest laws generally don't allow trustees overseeing public funds to have a financial interest in any contract approved by them — "or by any body or board of which they are members."

The thinking is, even if the board member sits out the vote, there may be a conflict because board members are friendly with each other.

According to the latest publicly available financial documents for the Children's Initiative, the group has $1.5 million in revenue, and pays a salary of $109,000 to McBrayer. So the First 5 contracts represent a fair amount of revenue to the group.

Good-government advocates said the awards should be competitively bid and be debated and discussed in a public setting.

“There needs to be very close attention paid to transparency, and frankly there should be closer attention paid to who is making appointments to the commission,” said Kathay Feng of California Common Cause.

Lawyers at the County Counsel’s Office determined the grant awards comply with state conflict-of-interest laws.

First 5 San Diego said an independent selection committee evaluated The Children’s Initiative application and recommended it for funding, and granting funds to the county health office lets the commission better leverage its assets.

“First 5 San Diego has policies, procedures, and safeguards put in place that are reviewed on an ongoing basis to ensure our funding is spent in a manner that maximizes services to the public,” Executive Director Kimberly Gallo said in a statement. “Since FY 12‐13 we have been able to leverage an additional $33,652,383 through all our contracts. Further, this funding is ultimately contracted to community organizations across the region in accordance with standards established by the County of San Diego.”

This year, the Children’s Initiative is receiving $233,259 in commission funding. The grant funds, designated for childhood injury prevention programs, are aimed at making homes, cars and communities safer for children.

McBrayer joined the First 5 board in 2009.

Gallo said McBrayer’s charity began receiving commission funding in 2013, when it collected $195,000 following the independent evaluation. The group received $225,000 in tobacco taxes in 2014, records show.

Including contracts approved in advance, First 5 has awarded nearly $1.4 million to the Children’s Initiative between 2013 and 2018.

The Children’s Initiative released a statement describing a number of safeguards the group and McBrayer take to avoid a conflict.

For one thing, McBrayer takes no part in reviewing, rating or scoring any grant requests at First 5, the statement said. Also, at the Children’s Initiative, McBrayer does not take part in any planning or writing of grant applications submitted to First 5.

Further, the statement said, “The CEO does not receive any compensation from this grant in her salary or fringe benefits.”

The county public health office received $9 million over the past three years, and will collect at least $1.2 million over the next four years. Gallo said the awards are a smart investment in San Diego County infants and toddlers.

“In circumstances where combining HHSA and First 5 San Diego funding allows us to leverage additional local, state and/or federal dollars, we do so to maximize services to children and families and reduce administrative costs,” she said.

Macchione and McBrayer have known each other for years. He serves on her charity’s board of directors, and County Chief Administrative Officer Helen Robbins-Meyer serves on the charity’s advisory board.

McBrayer formerly sat on a state commission that in 2010 awarded $100,000 in grant money to San Diego County, which accepted the funds and directed it to the Children’s Initiative. McBrayer said then that she recused herself from the Corrections Standards Authority vote in order to avoid the appearance of any conflict of interest.

Over the years, McBrayer’s charity has received hundreds of thousands of dollars in no-bid county contracts dating to the 1990s, including money for after-school services and a grant-coordinating effort that seeks to help other nonprofits apply for and receive state and federal funding.

“I’m proud of my partnerships,” McBrayer said in a 2010 interview. “It allows us to serve the kids of San Diego better.”

The First 5 commission has had issues with conflicts in the past.

Commissioner Charlene Tressler resigned in 2009 amid an investigation by The San Diego Union-Tribune into commission votes that steered more than $8 million to a charity run by Tressler and a private preschool she co-owned. Unlike McBrayer and Macchione, Tressler cast votes on the funding in question.

County supervisors filled the vacancy by appointing McBrayer, a former national teacher of the year.